TOWNSHIP OF WASHINGTON, N.J., Jan. 29 /PRNewswire-FirstCall/ -- Oritani Financial Corp. (the "Company" or "OFC") , the holding company for Oritani Savings Bank (the "Bank") reported net income of $2.2 million or $0.06 per share, for the three months ended December 31, 2007, and $5.2 million or $0.13 per share, for the six months ended December 31, 2007. This compares to net income of $2.5 million and $4.4 million for the corresponding 2006 periods, respectively.
Kevin J. Lynch, the Company's Chairman, President and CEO, commented on the results, "I was particularly pleased with our loan growth coupled with our asset quality." Loan originations totaling $98.7 million fueled net loan growth of $74.7 million during the quarter ended December 31, 2007. Lynch continued, "Our delinquencies remain extremely low and we have not had a charge off in over ten years." At December 31, 2007, Oritani had no loans greater than 60 days delinquent and the ratio of loan loss reserves to total loans was 1.16%.
Comparison of Operating Results for the Periods Ended December 31, 2007 and 2006
Net Income. Net income decreased $261,000 or 10.6%, to $2.2 million for the quarter ended December 31, 2007, from net income of $2.5 million for the corresponding 2006 quarter. This decrease was primarily due to increased operating expenses and provision for loan losses, as well as an increased effective tax rate, partially offset by increased net interest income. Over the period, our annualized return on average assets decreased to 0.69% for the 2007 quarter compared to 0.84% for the 2006 quarter.
Net income increased $720,000 or 16.2%, to $5.2 million for the six months ended December 31, 2007, from net income of $4.4 million for the corresponding 2006 period. This increase was primarily due to increased net interest income partially offset by increased operating expenses and provision for loan losses, as well as an increased effective tax rate. Over the period, our annualized return on average assets increased to 0.83% for the 2007 period compared to 0.80% for the 2006 period.
The net interest income in the 2007 periods was positively impacted by the deployment of the funds raised by the Company's initial public offering, which closed on January 23, 2007. Results for the 2006 periods were enhanced through the reinvestment of the proceeds received from the subscription stock offering.
Total Interest Income. Total interest income increased by $2.3 million or 14.6%, to $17.7 million for the three months ended December 31, 2007, from $15.5 million for the three months ended December 31, 2006. The largest increase occurred in interest on loans, which increased $2.7 million or 25.5%, to $13.5 million for the three months ended December 31, 2007, from $10.7 million for the three months ended December 31, 2006. Over that same period, the average balance of loans increased $149.5 million and the yield on the portfolio increased 18 basis points. Interest on mortgage-backed securities available for sale ("MBS AFS") increased by $1.0 million to $1.2 million for the three months ended December 31, 2007, from $192,000 for the three months ended December 31, 2006. The average balance of MBS AFS increased $76.3 million and the yield on the portfolio increased 38 basis points over that same period. The changes in the average balance and yield were primarily due to purchases that totaled $83.5 million during the twelve months ended December 31, 2007. Interest on federal funds sold and short term investments decreased by $1.5 million for the three months ended December 31, 2007, to $230,000 from $1.7 million for the three months ended December 31, 2006. The average balance of this portfolio decreased $104.8 million and the yield decreased 63 basis points over the period. The portfolio primarily consists of overnight investments. The decrease in the yield is due to a decrease in the market yield for this type of investment. The balance at December 31, 2006 reflects the proceeds from the subscription offering that were deployed in overnight investments.
Total interest income increased by $5.7 million, or 19.5%, to $34.8 million for the six months ended December 31, 2007, from $29.1 million for the six months ended December 31, 2006. The largest increase occurred in interest on loans, which increased $5.3 million or 25.2%, to $26.2 million for the six months ended December 31, 2007, from $21.0 million for the six months ended December 31, 2006. Over that same period, the average balance of loans increased $136.5 million and the yield on the portfolio increased 24 basis points. Interest on securities available for sale increased by $752,000, to $1.0 million for the six months ended December 31, 2007, from $293,000 for the six months ended December 31, 2006. The average balance increased $28.6 million and the yield decreased 20 basis points over the period. Interest on mortgage-backed securities held to maturity decreased by $993,000, to $4.0 million for the six months ended December 31, 2007, from $5.0 million for the six months ended December 31, 2006. The average balance decreased $52.2 million and the yield increased 1 basis point over the period. The average balance decrease was due to paydowns in the portfolio as no new investment purchases of this type were made. Interest on MBS AFS increased by $1.5 million to $1.9 million for the six months ended December 31, 2007, from $395,000 for the six months ended December 31, 2006. The average balance of MBS AFS increased $52.7 million and the yield on the portfolio increased 50 basis points over that same period. Interest on federal funds sold and short term investments decreased by $898,000 for the six months ended December 31, 2007, to $1.1 million from $1.9 million for the six months ended December 31, 2006. The average balance of this portfolio decreased $31.9 million and the yield decreased 18 basis points over the period.
Total Interest Expense. Total interest expense increased by $882,000, or 10.4%, to $9.3 million for the three months ended December 31, 2007, from $8.4 million for the three months ended December 31, 2006. Interest expense continues to be substantially affected by the current interest rate environment. Market rates for consumer deposits have remained high, and the Bank has increased rates on deposit products in order to minimize outflows and attract new deposit accounts. Interest expense on deposits increased by $221,000, or 3.7%, to $6.2 million for the three months ended December 31, 2007, from $6.0 million for the three months ended December 31, 2006. The average balance of interest bearing deposits decreased $85.2 million and the average cost of these funds increased 52 basis points over this period. The decrease in the average balance of deposits was also impacted by the stock subscription offering. The stock subscription offering caused deposit balances at December 31, 2006 to be inflated. The Company experienced a run off of these deposits during the quarter ended March 31, 2007, after the stock offering closed. Interest expense on borrowings was affected by the higher interest rate environment as well as an increase in the average balance. Interest expense on borrowings increased by $661,000, or 27.1%, to $3.1 million for the three months ended December 31, 2007, from $2.4 million for the three months ended December 31, 2006. The average balance of borrowings increased $56.3 million and the cost increased 6 basis points over these periods. The increase in the average balance was necessary to fund asset growth and offset deposit erosion.
Total interest expense increased by $2.4 million, or 15.4%, to $18.1 million for the six months ended December 31, 2007, from $15.7 million for the six months ended December 31, 2006. The factors described above for the three month period also affected the six month period. Interest expense on deposits increased by $1.3 million, or 11.5%, to $12.5 million for the six months ended December 31, 2007, from $11.2 million for the six months ended December 31, 2006. The average balance of interest bearing deposits decreased $38.6 million and the average cost of these funds increased 54 basis points over this period. Interest expense on borrowings increased by $1.1 million, or 25.2%, to $5.6 million for the six months ended December 31, 2007, from $4.4 million for the six months ended December 31, 2006. The average balance of borrowings increased $45.9 million and the cost increased 10 basis points over this period.
Net Interest Income Before Provision for Loan Losses. Net interest income increased by $1.4 million, or 19.7%, to $8.4 million for the three months ended December 31, 2007, from $7.0 million for the three months ended December 31, 2006. The Company's net interest rate spread decreased to 2.02% for the three months ended December 31, 2007, from 2.21% for the three months ended December 31, 2006. However, the Company's net interest margin increased to 2.80% for the three months ended December 31, 2007, from 2.55% for the three months ended December 31, 2006. The increased margin is directly attributable to the deployment of the net proceeds raised in the initial public offering. On a linked quarter comparison, the Company's net interest rate spread decreased 9 basis points to 2.02% from 2.11% for the three months ended September 30, 2007 and the Company's net interest margin decreased 9 basis points to 2.80% from 2.89% for the three months ended September 30, 2007. The Company's net interest rate spread is significantly impacted by the interest rate environment. The Company's interest income is typically more dependent on long term rates while interest expense is typically more dependent on short term rates. The interest rate curve was flat to inverted most of the period. In addition, the federal fund rate exceeded most treasury rates for the majority of the period. These circumstances reduced our interest income and increased our interest expense, thereby decreasing both our spread and margin. Our significant loan growth partially mitigated this impact.
Net interest income increased by $3.3 million, or 24.3%, to $16.7 million for the six months ended December 31, 2007, from $13.4 million for the six months ended December 31, 2006. The Company's net interest rate spread decreased to 2.07% for the six months ended December 31, 2007, from 2.21% for the six months ended December 31, 2006. The Company's net interest margin increased to 2.84% for the six months ended December 31, 2007, from 2.57% for the six months ended December 31, 2006.
Provision for Loan Losses. The Company recorded provisions for loan losses of $950,000 for the three months ended December 31, 2007 as compared to $275,000 for the three months ended December 31, 2006. The Company also recorded provisions for loan losses of $1.3 million for the six months ended December 31, 2007 as compared to $425,000 for the six months ended December 31, 2006. There were no recoveries or charge-offs in any of the periods and delinquencies were minimal. The Company's allowance for loan losses is analyzed quarterly and many factors are considered. The primary reason for the increase in the provision for both the three months and the six months ended December 31, 2007 and 2006 was to address loan growth that occurred during the periods, particularly in the multifamily and commercial real estate loan portfolios.
Other Income. Other income increased by $101,000, or 9.4%, to $1.2 million for the three months ended December 31, 2007, from $1.1 million for the three months ended December 31, 2006. The primary reason for the increase was due to the real estate investment captions of net real estate operations and income from investments in real estate joint ventures, which increased by $86,000, or 17.2%, to $586,000 for the three months ended December 31, 2007, from $500,000 for the three months ended December 31, 2006. The income reported in these captions is dependent upon the operations of various properties and is subject to fluctuation.
Other income increased by $249,000, or 11.0%, to $2.5 million for the six months ended December 31, 2007, from $2.3 million for the six months ended December 31, 2006. The primary change was again in the real estate investment captions of net real estate operations and income from investments in real estate joint ventures, which increased by $228,000, or 20.1%, to $1.4 million for the six months ended December 31, 2007, from $1.1 million for the six months ended December 31, 2006.
Other Expenses. Operating expenses increased by $926,000 or 23.2% to $4.9 million for the three months ended December 31, 2007, from $4.0 million for the three months ended December 31, 2006. The primary increase was in the area of compensation, payroll taxes and fringe benefits which increased $811,000, or 29.7%, over the periods. This increase was primarily comprised of a $329,000 increase in compensation, $409,000 in costs associated with the ESOP and a $51,000 increase in payroll taxes.
Operating expenses increased by $891,000 or 10.8% to $9.1 million for the six months ended December 31, 2007, from $8.2 million for the six months ended December 31, 2006. The increase was again primarily due to compensation, payroll taxes and fringe benefits which increased $793,000, or 13.7%, over the periods. This increase was primarily comprised of a $517,000 increase in compensation, $695,000 in costs associated with the ESOP and a $60,000 increase in payroll taxes partially reduced by a decrease in pension cost of $498,000.
Income Tax Expense. Income tax expense for the three months ended December 31, 2007, was $1.5 million, due to pre-tax income of $3.7 million, resulting in an effective tax rate of 40.7%. For the three months ended December 31, 2006, income tax expense was $1.4 million, due to pre-tax income of $3.8 million, resulting in an effective tax rate of 35.7%. Income tax expense for the six months ended December 31, 2007, was $3.6 million, due to pre-tax income of $8.7 million, resulting in an effective tax rate of 40.9%. For the six months ended December 31, 2006, income tax expense was $2.5 million, due to pre-tax income of $7.0 million, resulting in an effective tax rate of 36.4%. The Company's effective tax rate increased in 2007 due to changes in New Jersey tax law.
Comparison of Financial Condition at December 31, 2007 and June 30, 2007
Total Assets. Total assets increased $105.0 million, or 8.8%, to $1.30 billion at December 31, 2007, from $1.19 billion at June 30, 2007. The increases were primarily in the captions of loans and MBS AFS, and were primarily funded through increased borrowings.
Cash and Cash Equivalents. Cash and cash equivalents (which include fed funds and short term investments) decreased $36.9 million to $26.6 million at December 31, 2007, from $63.5 million at June 30, 2007. The decrease was a result of utilizing cash to fund loan and security growth. The Company had maintained high balances in this category as it felt that this was the most effective temporary investment of funds raised in the initial public offering that were not deployed in longer term assets.
Net Loans. Loans, net increased $107.3 million, or 14.1%, to $865.8 million at December 31, 2007, from $758.5 million at June 30, 2007. The Company continued its emphasis on loan originations, particularly multifamily and commercial real estate loans. Loan originations for the six months ended December 31, 2007 totaled $159.8 million.
Securities Available for Sale. Securities available for sale increased $2.8 million, or 7.9%, to $38.3 million at December 31, 2007 from $35.4 million at June 30, 2007. This increase was due to purchases during the period.
Mortgage-Backed Securities Held to Maturity. Mortgage-backed securities held to maturity decreased $25.6 million, or 11.8%, to $191.8 million at December 31, 2007 from $217.4 million at June 30, 2007. This decrease was due to principal repayments received on this portfolio.
Mortgage-Backed Securities Available for Sale. Mortgage-backed securities available for sale increased $52.8 million to $91.5 million at December 31, 2007 from $38.8 million at June 30, 2007. This increase was due to purchases of $56.5 million during the period partially offset by principal repayments received on this portfolio.
Federal Home Loan Bank of New York ("FHLB-NY") Stock. FHLB-NY stock increased $4.9 million, or 46.0%, to $15.5 million at December 31, 2007, from $10.6 million at June 30, 2007. Additional purchases of this stock were required due to additional advances obtained from FHLB-NY.
Deposits. Deposits decreased $8.6 million, or 1.2%, to $687.2 million at December 31, 2007, from $695.8 million at June 30, 2007. The decrease was primarily in our savings account balances which decreased $6.6 million. Deposit growth continues to be challenging in the competitive New Jersey market.
Borrowings. Borrowings increased $108.6 million, or 55.2%, to $305.2 million at December 31, 2007, from $196.7 million at June 30, 2007. Borrowings were necessary to fund loan growth.
Stockholders' equity. Stockholders' equity increased $7.4 million, or 2.7%, to $280.0 million at December 31, 2007, from $272.6 million at June 30, 2007. The increase was due to net income for the six month period augmented by an increase of $900,000 to retained income as a result of the adoption of Financial Interpretation Number 48 on July 1, 2007, as well as an increase in the value of securities classified as available for sale and amortizations related to the ESOP stock.
About the Company
Oritani Financial Corp. is the holding company for Oritani Savings Bank, a savings bank offering a full range of retail and commercial loan and deposit products. Oritani Savings Bank is dedicated to providing exceptional personal service to their individual and business customers. The Bank currently operates its main office and 18 full service branches in the New Jersey Counties of Bergen, Hudson and Passaic. For additional information about Oritani Savings Bank, please visit http://www.oritani.com/.
On November 14, 2007, the Company announced that it had entered into an Agreement and Plan of Merger with Greater Community Bancorp ("GCB"), pursuant to which the GCB will merge with and into the Company, with the Company being the surviving corporation, pending regulatory and GCB shareholder approvals and other customary closing conditions.
Additional Information and Where to Find It
OFC and GCB will file a registration statement, a proxy statement/prospectus and other relevant documents concerning the proposed merger with the Securities and Exchange Commission (the "SEC"). Shareholders are urged to read the registration statement and the proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about the merger. You will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings containing information about OFC and GCB, at the SEC's Internet site (http://www.sec.gov/). Copies of the proxy statement/prospectus to be filed by OFC also can be obtained, when available and without charge, by directing a request to Oritani Financial Corp., Attention: Kevin J. Lynch, 370 Pascack Road, Township of Washington, New Jersey 07676, (201) 664-5400 or to Greater Community Bancorp, Attention: Anthony M. Bruno, 55 Union Boulevard, Totowa, New Jersey 07512, (973) 942-1111.
Participants in Solicitation
Oritani Financial Corp., Greater Community Bancorp and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of OFC and GCB in connection with the merger. Information about the directors and executive officers of OFC is set forth in OFC's most recent proxy statement filed with the SEC on Schedule 14A, which is available at the SEC's Internet site (http://www.sec.gov/) and upon request from OFC at the address set forth in the preceding paragraph. Additional information regarding the interests of these participants may be obtained by reading the proxy statement/prospectus regarding the proposed merger when it becomes available. Information about the directors and executive officers of GCB and their ownership of GCB common stock is set forth in GCB's most recent proxy statement as filed with the SEC on Schedule 14, which is available at the SEC's Internet site and upon request from GCB at the address in the preceding paragraph.
Forward Looking Statements
Certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.
The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions, which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Oritani Financial Corp. and Subsidiaries Township of Washington, New Jersey Consolidated Balance Sheets December 31, 2007 and June 30, 2007 (in thousands, except per share data) December 31, June 30, 2007 2007 (unaudited) Assets Cash on hand and in banks $10,454 $7,823 Federal funds sold and short term investments 16,189 55,703 Cash and cash equivalents 26,643 63,526 Loans, net 865,818 758,542 Securities held to maturity, estimated market value of $2,998 and $5,347 at December 31, 2007 and June 30, 2007, respectively 3,000 5,415 Securities available for sale, at market value 38,253 35,443 Mortgage-backed securities held to maturity, estimated market value of $189,251 and $210,505 at December 31, 2007 and June 30, 2007, respectively 191,829 217,406 Mortgage-backed securities available for sale, at market value 91,549 38,793 Bank Owned Life Insurance (at cash surrender value) 25,888 25,365 Federal Home Loan Bank of New York stock, at cost 15,505 10,619 Accrued interest receivable 5,832 4,973 Investments in real estate joint ventures, net 5,821 6,200 Real estate held for investment 2,523 2,492 Office properties and equipment, net 8,270 8,361 Other assets 18,496 17,308 $1,299,427 $1,194,443 Liabilities Deposits $687,179 $695,757 Borrowings 305,238 196,661 Advance payments by borrowers for taxes and insurance 6,015 5,684 Accrued taxes payable 303 1,463 Official checks outstanding 2,342 5,050 Other liabilities 18,357 17,258 Total liabilities 1,019,434 921,873 Stockholders' Equity Preferred stock, $0.01 par value; 10,000,000 shares authorized-none issued or outstanding - - Common stock, $0.01 par value; 80,000,000 shares authorized; 40,552,162 issued and outstanding at December 31, 2007 and June 30, 2007 130 130 Additional paid-in capital 127,890 127,710 Unallocated common stock held by the employee stock ownership plan (15,102) (15,499) Retained income 167,368 161,300 Accumulated other comprehensive loss, net of tax (293) (1,071) Total stockholders' equity 279,993 272,570 $1,299,427 $1,194,443 Oritani Financial Corp. and Subsidiaries Township of Washington, New Jersey Consolidated Statements of Income Three and Six Months Ended December 31, 2007 and 2006 (unaudited) Three months ended Six months ended Dec. 31 Dec. 31 2007 2006 2007 2006 (in thousands, except share data) Interest income: Interest on mortgage loans $13,472 $10,735 $26,244 $20,958 Interest on securities held to maturity 314 281 585 520 Interest on securities available for sale 543 149 1,045 293 Interest on mortgage-backed securities held to maturity 1,932 2,421 3,979 4,972 Interest on mortgage-backed securities available for sale 1,231 192 1,862 395 Interest on federal funds sold and short term investments 230 1,682 1,050 1,948 Total interest income 17,722 15,460 34,765 29,086 Interest expense: Deposits and stock subscription proceeds 6,227 6,006 12,521 11,228 Borrowings 3,098 2,437 5,562 4,442 Total interest expense 9,325 8,443 18,083 15,670 Net interest income before provision for loan losses 8,397 7,017 16,682 13,416 Provision for loan losses 950 275 1,300 425 Net interest income 7,447 6,742 15,382 12,991 Other income: Service charges 288 275 544 533 Real estate operations, net 382 226 764 533 Income from investments in real estate joint ventures 204 274 598 601 Bank-owned life insurance 263 245 523 483 Other income 37 53 74 104 Total other income 1,174 1,073 2,503 2,254 Operating expenses: Compensation, payroll taxes and fringe benefits 3,543 2,732 6,584 5,791 Advertising 125 126 248 250 Office occupancy and equipment expense 402 395 788 774 Data processing service fees 278 252 524 512 Federal insurance premiums 24 23 47 45 Telephone, Stationary, Postage and Supplies 100 101 199 185 Insurance, Legal, Audit and Accounting 258 211 410 364 Other expenses 192 156 340 328 Total operating expenses 4,922 3,996 9,140 8,249 Income before income tax expense 3,699 3,819 8,745 6,996 Income tax expense 1,504 1,363 3,577 2,548 Net income $2,195 $2,456 $5,168 $4,448 Basic income per common share $0.06 n/a $0.13 n/a Average Balance Sheet and Yield/Rate Information For the three months ended (unaudited) December 31, 2007 Average Outstan- Interest Average ding Earned/ Yield/ Balance Paid Rate (Dollars in thousands) Interest-earning assets: Loans $828,350 $13,472 6.51% Securities available for sale 41,038 543 5.29% Securities held to maturity 19,003 314 6.61% Mortgage backed securities available for sale 91,660 1,231 5.37% Mortgage backed securities held to maturity 202,320 1,932 3.82% Federal funds sold and short term investments 19,174 230 4.80% Total interest-earning assets 1,201,545 17,722 5.90% Non-interest-earning assets 65,065 Total assets $1,266,610 Interest-bearing liabilities: Savings deposits & stock subscription proceeds 152,589 649 1.70% Money market 42,638 440 4.13% NOW accounts 72,224 219 1.21% Time deposits 416,865 4,919 4.72% Total deposits 684,316 6,227 3.64% Borrowings 278,225 3,098 4.45% Total interest-bearing liabilities 962,541 9,325 3.88% Non-interest-bearing liabilities 25,907 Total liabilities 988,448 Stockholders' equity 278,162 Total liabilities and stockholders' equity $1,266,610 Net interest income $8,397 Net interest rate spread (1) 2.02% Net interest-earning assets (2) $239,004 Net interest margin (3) 2.80% Average of interest-earning assets to interest-bearing liabilities 1.25X December 31, 2006 Average Outstan- Interest Average ding Earned/ Yield/ Balance Paid Rate (Dollars in thousands) Interest-earning assets: Loans $678,853 $10,735 6.33% Securities available for sale 10,721 149 5.56% Securities held to maturity 21,207 281 5.30% Mortgage backed securities available for sale 15,387 192 4.99% Mortgage backed securities held to maturity 250,824 2,421 3.86% Federal funds sold and short term investments 123,949 1,682 5.43% Total interest-earning assets 1,100,941 15,460 5.62% Non-interest-earning assets 66,282 Total assets $1,167,223 Interest-bearing liabilities: Savings deposits & stock subscription proceeds 245,797 906 1.47% Money market 29,931 283 3.78% NOW accounts 76,108 225 1.18% Time deposits 417,706 4,592 4.40% Total deposits 769,542 6,006 3.12% Borrowings 221,918 2,437 4.39% Total interest-bearing liabilities 991,460 8,443 3.41% Non-interest-bearing liabilities 23,334 Total liabilities 1,014,794 Stockholders' equity 152,429 Total liabilities and stockholders' equity $1,167,223 Net interest income $7,017 Net interest rate spread (1) 2.21% Net interest-earning assets (2) $109,481 Net interest margin (3) 2.55% Average of interest-earning assets to interest-bearing liabilities 1.11X (1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average total interest-earning assets. Average Balance Sheet and Yield/Rate Information For the six months ended (unaudited) December 31, 2007 Average Outstan- Interest Average ding Earned/ Yield/ Balance Paid Rate (Dollars in thousands) Interest-earning assets: Loans $802,339 $26,244 6.54% Securities available for sale 39,252 1,045 5.32% Securities held to maturity 18,092 585 6.47% Mortgage backed securities available for sale 68,817 1,862 5.41% Mortgage backed securities held to maturity 206,130 3,979 3.86% Federal funds sold and short term investments 40,064 1,050 5.24% Total interest-earning assets 1,174,694 34,765 5.92% Non-interest-earning assets 66,954 Total assets $1,241,648 Interest-bearing liabilities: Savings deposits & stock subscription proceeds 154,183 1,298 1.68% Money market 42,036 877 4.17% NOW accounts 73,321 437 1.19% Time deposits 419,391 9,909 4.73% Total deposits 688,931 12,521 3.63% Borrowings 250,203 5,562 4.45% Total interest-bearing liabilities 939,134 18,083 3.85% Non-interest-bearing liabilities 26,660 Total liabilities 965,794 Stockholders' equity 275,854 Total liabilities and stockholders' equity $1,241,648 Net interest income $16,682 Net interest rate spread (1) 2.07% Net interest-earning assets (2) $235,560 Net interest margin (3) 2.84% Average of interest-earning assets to interest-bearing liabilities 1.25X December 31, 2006 Average Interest Average Outstanding Earned/ Yield/ Balance Paid Rate (Dollars in thousands) Interest-earning assets: Loans $665,818 $20,958 6.30% Securities available for sale 10,610 293 5.52% Securities held to maturity 20,971 520 4.96% Mortgage backed securities available for sale 16,088 395 4.91% Mortgage backed securities held to maturity 258,377 4,972 3.85% Federal funds sold and short term investments 71,936 1,948 5.42% Total interest-earning assets 1,043,800 29,086 5.57% Non-interest-earning assets 62,162 Total assets $1,105,962 Interest-bearing liabilities: Savings deposits & stock subscription proceeds 210,851 1,531 1.45% Money market 28,669 514 3.59% NOW accounts 74,565 444 1.19% Time deposits 413,474 8,739 4.23% Total deposits 727,559 11,228 3.09% Borrowings 204,306 4,442 4.35% Total interest-bearing liabilities 931,865 15,670 3.36% Non-interest-bearing liabilities 22,546 Total liabilities 954,411 Stockholders' equity 151,551 Total liabilities and stockholders' equity $1,105,962 Net interest income $13,416 Net interest rate spread (1) 2.21% Net interest-earning assets (2) $111,935 Net interest margin (3) 2.57% Average of interest-earning assets to interest-bearing liabilities 1.12X (1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average total interest-earning assets.
